head of telemarketing operations charged with $ 19 million credit card laundering program | USAO-SDNY


Audrey Strauss, United States attorney for the Southern District of New York, and William F. Sweeney Jr., deputy director in charge of the New York office of the Federal Bureau of Investigation (“FBI”), announced the arrest today ‘hui. of STEVEN SHORT, the former director of EM Systems & Services, LLC, and affiliates (“EM Systems”), accused of fraudulently obtaining credit card processing services for his deceptive telemarketing operation based in Florida. As alleged in a replacement indictment unsealed today, which also contains previously announced charges against Brandon Becker, the former CEO of CardReady, LLC (“CardReady”), SHORT and Becker fraudulently conducted a money laundering program credit card access to the underlying credit card telemarketing system of SHORT. From roughly 2012 to 2015, according to the indictment, SHORT and EM Systems generated more than $ 19 million from thousands of customers who received cold calls promising to reduce their overall debt in exchange for fees of up to ‘at $ 1,495. The telemarketing operation has resulted in hundreds of complaints of fraud and deceptive tactics, as well as requests for millions of dollars in refunds and chargebacks. The charges include that, from around 2012 to 2015, SHORT, Becker, and their co-conspirators carried out a fraudulent credit card processing scheme, processing the credit card charges for SHORT’s telemarketing operation, even though applicable contracts prohibited the processing of credit card charges for so-called “debt consolidation” and “interest rate reduction” services. SHORT and Becker are accused of committing this processing fraud by creating dozens of fake merchant accounts and bogus merchant apps, covering up the true nature of SHORT’s telemarketing operation and defrauding a card processing company associated credit and a federally insured bank processing over $ 19 million. in payments for the plan.

SHORT was arrested this morning in Tampa, Florida, and is due in Tampa before US trial judge Sean Flynn. Becker was initially arrested at Los Angeles International Airport on September 22, 2019. The case is referred to Judge Preska and is scheduled for trial on January 31, 2022.

US Attorney Strauss said: “Steven Short and his co-defendant allegedly attacked people already in debt in order to enrich themselves, using a network of shell companies to perpetuate and cover up their conduct. As credit cards and electronic payments become an increasingly central part of our society and economy, consumers and businesses have every right to expect truthfulness and fair use in the marketplace. , and not to fraud and deception.

FBI Deputy Director William F. Sweeney Jr. said: “As alleged, Becker and Short created over $ 19 million in illegitimate profits, from victims who were deliberately targeted because of their debt status. . come out in much the same way, faced with a federal indictment which itself carries significant charges. “

According to the indictment unsealed today:[1]

SHORT controlled EM Systems and its subsidiaries, based in Florida. Starting in 2012, SHORT sought to use EM Systems to implement a telemarketing program targeting people in debt and offering them so-called financial services. In order to bill for these purported services through credit cards, SHORT sought to enter the credit card processing market, through Becker and CardReady.

Becker was the CEO of CardReady, a Los Angeles-based company acting as a sales agent in the credit card processing industry. As a sales agent, CardReady found merchants who wanted credit card processing services, such as SHORT, and submitted merchant inquiries on behalf of those merchants to an independent sales organization. (“ISO”), referred to in the indictment as the “New York ISO”. ISO New York then assessed the merchant requests and referred the acceptable merchant accounts up the chain to Payment Processor-1 and Bank-1. Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases from customers who had used credit cards.

Around 2012, SHORT negotiated an agreement with Becker to obtain credit card processing for SHORT and EM Systems. Under the deal, CardReady would retain approximately one-third of SHORT and EM Systems’ credit card sales transactions, in exchange for providing them with access to the credit card processing network. For about the next two years, SHORT and EM Systems implemented a telemarketing program in which they used telemarketers to cold-call consumers, targeting consumers with outstanding credit card debt. Cold Calls offered services to clients, including debt consolidation and reducing interest rates on their debts, which were prohibited by applicable guidelines from Bank-1 and associated processing entities (the ” Guidelines ”), and which – as SHORT and Becker knew – would produce chargebacks from dissatisfied customers well in excess of the number and rate of chargebacks allowed under the guidelines.

By securing payment card processing for EM Systems, SHORT and Becker concealed that EM Systems was the real underlying merchant. Instead, SHORT, Becker and their co-conspirators, over a period of more than 20 months, created approximately 26 shell merchant companies, each headed by a “signer” (the “shell merchants” and the “shell merchant accounts” “). The 26 signatories of the 26 Sham Merchants generally did not have a business of their own and knew little or nothing about EM Systems’ business. In return for signing the documents, the signers received a small fee from CardReady. SHORT, Becker, and their co-conspirators prepared and coordinated fraudulent merchant apps for each of the fictitious merchants, through merchant apps that falsely portrayed the fictitious merchants to make them look like legitimate independent businesses and to increase the likelihood that the associated fictitious merchant account would be approved for processing by ISO New York, payment processor-1, and bank-1. These bogus merchant demands also hid the true association of the fictitious merchants with EM Systems.

By directing EM Systems’ payment processing through these fictitious merchant accounts, SHORT and Becker accomplished a number of fraudulent objectives. First, the use of these fake merchant accounts allowed EM Systems to conceal its identity from payment processor-1 and bank-1 and to maintain payment card processing. This was particularly relevant as payment processor-1 has repeatedly instructed CardReady to shut down individual fake merchant accounts due to excessive chargebacks and reports of banned sales of services. SHORT and Becker then pushed CardReady to swiftly replace closed fictitious merchant accounts with new fictitious merchant accounts, preventing Payment Processor-1 from shutting down its processing of Telemarketer-1 and other high-risk merchants. Second, the fraudulent processing system allowed EM Systems to spread its fees, refunds and chargebacks across multiple fictitious merchant accounts. SHORT and Becker thus allowed EM Systems to evade the chargeback monitoring programs operated by Bank-1, Payment Processor-1 and the ISO of New York.

* * *

SHORT, 44, of Tampa, Fla., Is charged on counts one and four of the indictment, conspiracy to commit wire and bank fraud, and bank fraud. Count One and Count Four each carry a maximum sentence of 30 years in prison and a fine of up to $ 1 million or double the gross gain or loss resulting from the offense.

Becker, 50, of Los Angeles, Calif., Is charged with four counts: conspiracy to commit wire fraud and bank fraud, conspiracy to make false statements to a bank, wire fraud and fraud banking. Count One and Count Four each carry a maximum sentence of 30 years in prison and a fine of up to $ 1 million or double the gross gain or loss resulting from the offense. Count Two and Count Three each carry a maximum sentence of 20 years in prison and a maximum fine of $ 250,000 or double the gross gain or loss resulting from the offense.

The potential maximum sentences for each accused are prescribed by Congress and are provided here for informational purposes only, as any conviction of the accused will be determined by the judge.

Ms. Strauss praised the FBI’s extraordinary work and thanked the Federal Trade Commission for its help.

This matter is being handled by the Office’s Complex Fraud and Cybercrime Unit. Deputy US prosecutors David Raymond Lewis and Vladislav Vainberg are in charge of the prosecution.

The charges contained in the indictment are only charges, and the accused are presumed innocent until proven guilty.

[1] As the introductory sentence indicates, the entire text of the Indictment and the description of the Indictment set forth here constitute allegations only, and each fact described should be treated as an allegation. .

About Joan Ferguson

Check Also

Purely Commentary: Free loan in Hebrew: Ready to help as recession looms

David Contorer Hebrew Free Loan Detroit (HFL) is here to help: HFL has been on …

Leave a Reply

Your email address will not be published.